Which alternative should be selected

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Reference no: EM131513493

A bank can purchase an ATM for $110,000 that has an estimated life of 6 years. Maintenance over that period will begin at $2,500 annually and increase at a 10% rate. If the ATM is purchased, the bank will not be required to hire one additional teller. Including fringe benefits, the teller costs $18,000 per year, and this amount is expected to increase 5% annually. If the bank's cost of capital is 10%, which alternative should be selected?

Reference no: EM131513493

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